Western state attracts most foreign investors

Share this article

Bavaria has a reputation for being the most attractive region of Germany for foreign investors – but far more foreign-funded projects land in the western state of North Rhine-Westphalia, a new study shows.

About 25 percent of international investors would tip Bavaria as a particularly attractive state, followed by neighbour Baden-Württemberg with ten percent, the study by consultancy firm Ernst & Young shows.

The more gritty western industrial state of North Rhine-Westphalia (NRW) is only tipped as an attractive region for investment by six percent of those asked.

Yet the figures show a different story, with by far the most foreign investment projects starting up in NRW, Sunday's Die Welt newspaper reported.

Last year 155 foreign investment projects started up in NRW, more than three times the number in Bavaria.

“NRW is a strong economic location with good infrastructure and a big workforce potential,” study author Peter Englisch told the paper.

With 4,550 jobs created due to foreign investment in 2011, NRW was streets ahead of other states, with Berlin following with 1,975, Baden-Württemberg in third place with 1,817 and Bavaria in sixth place with 1,548.

NRW cities Düsseldorf and Cologne were among the top five top German spots for foreign investments. Düsseldorf leads with 52 projects last year, followed by Frankfurt with 48 and Berlin with 38. Bavaria's Munich is ranked fourth with 31 projects.

The study also shows that Chinese firms are particularly keen to invest in NRW, while the Swiss tend to opt for Baden-Württemberg which is just next-door. British investors head for Berlin, even though, Englisch said, “Business orientation is missing there, as is support for investors.”

Tellingly, the vast majority of companies investing in the capital city were novices in Germany – of those already active in the country, just two percent said they could imagine setting up a business or subsidiary there.

The strongest industries were auto making and machine building, as well as information technology. Investors come to Germany intending to get a foothold in the market to increase turnover, the papers said, although the country is also highly-regarded as a place to conduct research.

Most of last year's foreign investors came from the US, although there was an increase from Switzerland, fleeing the strong franc, said Englisch. Chinese investments were also on the increase.

Overall, foreign investment in Germany is rising, with the number of projects up by seven percent in 2011 over the previous year.